Google swallows YouTube for $1.65bn

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YouTube finally made its owners some cash today when search behemoth Google coughed up $1.65bn for the video clip mix-tape site.

The deal, trailed all weekend, came within hours of both firms striking deals with what they’d probably describe internally as old media companies.

As Google put it in when announcing the buy, “The acquisition combines one of the largest and fastest growing online video entertainment communities with Google's expertise in organizing information and creating new models for advertising on the Internet.”

YouTube will retain its “distinct brand identity” Google said, as well as its employees. Its backers will retain a shedload of Google shares, which no doubt will be converted into readies as soon as possible.

What does it mean for users? Apparently, “The combined companies will focus on providing a better, more comprehensive experience for users interested in uploading, watching and sharing videos, and will offer new opportunities for professional content owners to distribute their work to reach a vast new audience.”

We can only hope this means Google will provide a sensible way of searching and navigating clips, and will hold out the prospect of paying owners of copyrighted material that finds its way onto YouTube.

The deal came the same day that YouTube moved toward full legitimacy with a trio of deals with media giants. Presumably Google was waiting for the video clip site to head off any legal threats before signing on the dotted line.

Universal Music Group boss Doug Morriss had previously described YouTube as a "copyright infringer" which owed his firm tens of millions in royalties.

Now it seems he has acquiesced to the increasing distribution strength of YouTube, as have the big wigs over at Sony BMG.

The latter has properly gotten into bed with YouTube, with a carve-up of per-click advertising revenues on pages carrying its content. Universal has stopped shorter, inking a "strategic partnership" instead. YouTube will simply pay it for each music video or user-generated video that uses its music.

YouTube founder Chad Hurley said: "As a new distribution channel for media companies, YouTube is committed to balancing the needs of the fan community with those of copyright holders."

Warner Music embraced YouTube in September. Three of the big four record companies are now on board, with EMI the lone dissenter, though a deal is inevitable. Smaller record labels have been posting music videos to YouTube for months.

In the third of today's announcements, CBS becomes the first of the American networks to get smart to YouTube. NBC struck a more limited deal in June. CBS CEO Leslie Moonves said: "We're now able to offer select entertainment, news and sports programming to a new significant audience, get paid for it, and learn a few things along the way."

As well as providing content, CBS will act as policeman for user-uploaded video. It'll have sole discretion over whether video grabbed from its TV channels is allowed to stay on YouTube's servers. CBS will get a cut of advertising on pages it leaves online.

The firm will be the first to trial this new system, which YouTube hopes will placate twitchy copyright holders.